Free Imports Zindabad, Licence-Permit Murdabad!

Free Imports Zindabad, Licence-Permit Murdabad!


From a macro economist’s viewpoint, subsidies and price controls distort. So theoretically, the sharp fuel price rises, designed to do away with such things, is for the common good and worth the projected 1% inflation engendered by expected price rises. Notwithstanding protests from opposition parties and allies alike for its “anti-people” aspects.

Perhaps this is a good time to suggest the same market forces logic should also extend to other imports, particularly high-end finished goods, which face a wall of protectionism, even when we do not manufacture the items in India. We protect the inferior by taxing the superior in a classic bit of left-over Socialism.

Consider that the recent US launch of the 2010 Audi A-4, with a number of new bells and whistles, is priced at some $31,000 there, or a modest Rs. 15 lakhs. This is the kind of figure applied in India to the likes of the Skoda Laura and the Volkswagen Jetta, the C and B category marques respectively, from the same stable as the luxury class Audi. But in India, by the time the new A-4 is introduced, sometime in 2011, its price will be in an altogether more precious Rs. 30 or 35 lakh range.

An S Series Mercedes Benz limousine, or a seven series BMW, or the high-end Audi models, which currently sell in India for about 90 lakhs, would be hard pressed to cost a rupee more than Rs. 45 lakhs in Europe or the US. And if these top class cars, were assembled in India, you could probably shave off another Rs. 10 lakhs from their on- street price.

It could happen, spurred by ever higher sales numbers, as the Indian economy, particularly that of corporate India, grows. Call it affordable luxury, though at any reduced price, such items will still remain the province of a privileged few.

There is, however, a universally beneficial reason for letting in sophisticated engineering, including luxury cars, without prohibitive import duties. It tends to raise standards all around.

Consider that Volvo and Mercedes are going in for heavy investments in bus and truck manufacturing facilities in India. Can Ashok Leyland or Tata Motors afford to be left behind? Otherwise, why have they upgraded their design and manufacturing benchmarks with alacrity, including the acquisition of bus and truck plants in South Korea and elsewhere to facilitate the process? Before such competition was allowed, the same domestic companies, somnolent with Government protection, were quite content to sell shoddy vehicles using 1954 technology, well into the eighties and nineties!

On a pure merits basis, fearful protectionism translates into penalties applied to aspiration, and punishment to success. This hurts more in an interlinked world. But choosing such illogic, animated not by a forward-looking vision, works its post-imperial damage, as if we abused children of empire know nothing better than to repeat the brutalisation and injustice.

We have chosen to hobble our progress because of our piece-meal and ad hoc policy, putting us well behind other BRIC economies such as China, Brazil and Russia. We change only if we must, reluctantly, suspiciously, travelling along with our holdalls and tin trunks of yore, and the ubiquitous, if inappropriate kitchen sink also. In our Socialist decades of retardation, dismal economic policy was always swaddled in ideological hypocrisy and if it weren’t for the size of our domestic markets we would have been sunk long ago. Still, it is hard to forget such long used pathways.

Policies of exclusion and scarcity were practiced with a grim colonial mindset, to deliberately enrich cronies with nod and wink favouritism. We made a virtue of permitting duty free or quota regulated import of intermediate goods and technologies, required for the manufacture of products in India. So far so good, but there were invariably built-in licensing bonanzas so that the powers that be could eat their cakes and have them too. Such cynical policy sleight-of-hand led to unrelated diversifications, outright fraud and collusive corruption.

But while hobbling local enterprise, the same Government of India did not allow in fully-built units of anything manufactured abroad, without imposing punishing duties. Neither did it encourage foreign investment. These meant only low-end products were produced, or more truthfully, assembled and copied locally; while sophisticated things were invariably imported at considerable cost, and this applied to everything from defence purchases to chocolate.

Indian industry, unexposed to the intricacies of top class R&D or manufacture, even via the copycat route, languished in its second or third-rate morass. We developed little idea about quality and sophistication in goods or services, or even, let it be said, management or project implementation practices. It gives you some understanding as to why we are so poor at execution even today.

But maybe now, just maybe, for its liberating and self-affirming fallout, amongst other things, it is time to let in not just imported vehicles but a plethora of other items at their international price tags, like civilized and self-confident countries do.

Local industry that is inferior and under-funded will be impacted when this happens. But, whatever won’t excite market sentiment anymore in comparison with markedly better alternatives, will force innovation, to the overall betterment of core virtues, those very aspects which are worth keeping and preserving.

India is inching its way towards integration with the globe in various ways, ranging from satellites, missiles and space exploration, nuclear power and high-end technologies with “dual-use” potential, continuous modernisation of our military machine and our forecasting models for everything from the weather to the economy. Our new found concern about carbon credits, stock market practices, a logo for the rupee which could go convertible someday, and so on. And, of course, painfully bearing the brunt of prices, meaning by that the real prices, of petroleum products that we are forced to largely import.

But, we could gain at the swings what we lose at the roundabouts, with a reworking of our import policies, so that we welcome anything we cannot as yet produce here in India on an open and general basis. By doing this, we could spark off another paradigm shift in our journey to join the ranks of the brightest and the best. And it won’t be very long after that before we can manufacture and offer services that are value-added, technologically cutting-edge, competitively priced, yet second to none.


(1, 052 words)

June 27th, 2010
Gautam Mukherjee

Book Review: The Corruption Conundrum and Other Paradoxes and Dilemmas

Tree in Black- Sourav Biswas
http://www.youtube.com/watch?v=GusxltLA1vQ 
Book Review

Title: The Corruption Conundrum and Other Paradoxes and Dilemmas
Author: V. Raghunathan
Published in 2010 by Penguin Portfolio.

Probability Is The Only Certainty


This little book might seem at first to be an elaborate paean to cynicism, but it is nothing of the sort, even if it refuses to flinch from stating home truths. It does explore why corruption is universally rampant asserting: “a society is as corrupt as the system allows it to be,” but the author advocates remedies, not celebration.

Mr. V. Raghunathan, writer of this brilliant addition to management theory, taught Finance at IIM Ahmedabad for nearly two decades. He then went on to ING Vyasa Bank as its President before becoming the CEO of GMR Varalakshmi Foundation.

Here, he plays a continuous series of mind games via examples of logic with its knickers in a twist. But he starts off with the positive and commonsensical assertion that success is probable if the odds are meticulously pre-planned and materially stacked in one’s favour.

Raghunathan believes weighing and measuring componentry to arrive at probability, for or against a desired outcome, is the only certainty. It is, in plainspeak, an as-you-sow-so-shall-you-reap credo, very close to the age-old Hindu belief in Karma and its phenomena in tandem, namely cause and effect- applied to business, management, governance and decision-making.

Raghunathan, erudite, affable, conceptually lucid, is something of a Renaissance man, with six management books to his credit, additional skills as a cartoonist for a national daily and a columnist for the pink papers. He also played chess at the all-India level. He likes old locks and has gathered an impressive collection of the contraptions to himself.

His intellectual references, for the purposes of this book and its deductive and inductive logic explorations, are to do with the ancient Greek philosophers and other Western science moderns such as Albert Einstein who’s famous remark about certainty: God does not play dice, Raghunathan, to his credit, contests.

The author emphasises that: “God not only plays dice but His other name is random variability. If we do the right things, God’s way of rewarding us is to increase the probability of success.” Accordingly, Raghunathan does not talk of faith, except for fleeting references to the Bhagvad Gita, again to affirm the value of right action. There is no acknowledgement of predestination or embedded tendencies deep in our DNA programmed to ensure future outcomes or towards his assessment of probability.

The writer tries not to take sides in the moral equation. He is silent on Graham Greene’s belief that it is important to choose a side in order to remain human. But Greene, the master of moral dilemmas and cold betrayal depicted in novel after novel never confuses humanity with ethics. In fact, one may well remark at the quality of Greene’s vision of humanity which seems to consist of failings and wonder at its moral price!

Raghunathan on his part also makes clear that paradoxes, dilemmas and conundrums have no easy intellectual certainties, no obvious right answer or solution to them. What they present are either/or choices and sometimes, multiple-options based on the available facts.

Time and again, the author points to the inductive choices, also known, ironically, as leaps of faith. He rearranges the same set of numbers or gets the protagonists to cast the dice over and over, as in voting. And we see very different implications present themselves with each alteration. Raghunathan jokes, finally, about the best democractic decision being dictatorial.

To navigate safely through such binary or multipolar matters, mankind has traditionally turned to belief in a higher power for guidance and inspiration. Divorced from this ethical lodestar, it is quite easy to treat expediency as the greatest good, and wisdom as no more than comment on the durability of such expedient means.

Besides, these three cousins-paradox, dilemma and conundrum, tend to thrive in chaos. Applied to the stock market, Raghunathan points out that, “the opportunities to earn disproportionate returns are negligible in an efficient market”.

The author, a mathematician, is captivated by Game Theory, made famous by the acclaimed film A Beautiful Mind on the life of John Nash, its inventor. Game Theory states one reaches “equilibrium” on the very first move, meaning, the first move made well, as in the proverb “Well begun is half done”. But, Nash goes at uncovering such axiomatic truths mathematically, as does Raghunathan.

He describes the power of compounding, an open secret of the successful corporation, bank or wealthy individual. But the writer shows how the concept tends to elude the grasp of ordinary people, because of what he calls “counter-intuitive” thinking.

Finally, why did Raghunathan write this instructive, cerebral book: “To me, paradoxes are important in their own right. Paradoxes improve our logical thinking as well as intuition,” he says. That it aids research in behavioural economics and helps to prove or disprove economic phenomena is nothing to sniff at either.

(800 words)

16th June 2010
Gautam Mukherjee

Shortened version of this review appeared with the same title in the Sunday Pioneer on 11th July 2010 in the Agenda Section on the BOOKS page and also online at http://www.dailypioneer.com/

Cast your fate to the wind

http://www.youtube.com/watch?v=PddZZ83Be8E

Cast your fate to the wind

I set my sail as the tide comes in

And I just cast my fate to the wind

Vince Guaraldi

When a nation approaches a fresh apogee in its destiny, it must review its own narrative, however bitter. For growth, not just economic, but an overall enhancement of stature, which could lead to greatness, demands the shedding of inappropriate baggage.

But, almost axiomatically, there is the anxiety at the prospect of casting off from familiar shores. It calls for changes: for an end to navel-gazing and decisive action against enemies of the state; but also for letting bygones be bygones. It calls for the ruthless elimination of security threats and the relentless pursuit of national interest; but also for the forging of new ties and alliances, sometimes with unequal and powerful partners that have not always done the right thing by us.

India is rapidly and inexorably approaching that hallowed threshold, that long desired entrance to the portal of resurgent leading nations, with the appropriateness of our candidature held beyond dispute, and is called upon to make ready to seize its moment.  

Some of the reason for arriving at this juncture is attributable to our innate virtue. Our Hindu/Buddhist/Sufi/Jain influenced pacifism and philosophical moderation, and the capacity to absorb different strains and viewpoints into our body politic. In a troubled world perplexed by the mayhem harvested by more dichotomised ways in the Judeo-Christian tradition, our nuanced  responses, our seeming paradoxical embrace of opposing viewpoints, seems wise after all,  and no longer wily or effete - no more the object of derision and contempt.

And other reasons, such as the upheaval in a settled world order, caused humiliatingly by self-inflicted implosion, not external aggression or sabotage, is climactic. An order undisturbed since before the fall of the Berlin Wall; perhaps unchanged from the first Bretton Woods Conference after World War II.

The hard reality is that Europe and America, large as their economies are, will, evidently, not grow at more than one or two per cent per annum for years, if not decades. And this too is dependent on mercantile and political cooperation of the sizeable fast-growing nations such as India and China.

A mirror held to the changing world reflects news of China looking at buying Newsweek magazine put on the block by owners’ Washington Post; also struggling to survive as a US broad-sheet in the Internet Age. But what does China actually want with Time magazine’s feisty competitor? Could it be to get their world-view out more clearly to the target audience, and without inherent Western bias and prejudice?

India, recent purchasers of halcyon British automotive marques Land Rover, Range Rover and Jaguar through the Tata Group, is now moving towards making their engines in India. This move would have been deemed sacrilege a few years ago; but now, it has been prompted, not by a jingoistic Indian manager, but by the European CEO of Tata Motors. So the erstwhile financially troubled brands will be transformed: becoming more profitable and affordable. The engine design team will still be from the British Tata-owned operation, but the luxury vehicle engines will henceforth be made in India.

Meanwhile, Press reports state Beijing and Mumbai are pleased at the windfall discounts available on their high-end Mercedes Benz, BMW and Audi car purchases, occasioned by the persistent weakness in the Euro. This is probably good in the long run also, because the buying demand these days is in these, and suchlike places.   

The prompting to resize our ambitions is coming in from various sides, some positive some negative in their impetus. The intensifying of terrorism and internal insurgency is a measure, if backhanded, of both our democracy and our success. Nobody is whisked away at midnight in India for railing at the state however misguidedly. Treason is not a term used to gag dissent and make political opponents disappear. Nor is the Indian State put out at suggestions that it is the greatest terrorist of them all! This State, now seen as a contender, is subject to efforts from certain quarters to hinder its progress and sap its strength. Ergo, it is necessary for us to find the modern wherewithal to prevail, and thwart such designs.

But even left to itself, India’s economic growth is posing challenges to our somewhat bullock-cart and buffalo gazing political leadership. Besides, no politician or political party is able to hoodwink the population anymore. In the Internet Age the control over information is innately slippery. It is not just a matter of secrecy and leakages, but the transparency, including the hackery, engendered by the possibilities of technology available. It is this technology that is proving harder and harder to outwit. Every side of the fence is affected, the heroes and villains, and all those of us betwixt and bemused.

And the ideological narrative too has changed drastically. We are no longer Socialist. Perhaps neither is China. But ideology to them has become an internal matter for them to interpret as they see fit. Because China realised it’s priorities in the now seemingly distant eighties. And today, having paid its dues, is indeed in control of its metamorphosis.

So to do this thing we are now called upon to do, we too must ignore the scars of recent centuries, must let go the post-colonial angst, as well as more recent geo-political biases against us.

We need instead to focus and not be distracted by rear-viewing cacophony, narrow parochialism or phoney nationalism. There is no opportunism in recognition of ground reality. It is not wrong to jettison that which is spent.

Since independence, through forty years of a Socialist India, we worked obliquely to undermine the authority and power of the West. So it should come as no surprise that they did nothing to help us either!

But now all is different. We have a shot at reforming global trade talks and international institutional financing in our favour. We could be in the UNSC soon, not just as a temporary but permanent member. We could be taken off all the presently inaccessible high-technology lists. Our nuclear programmes could go forward unfettered.  We could address our regional concerns with Pakistan and China with much greater confidence.

But first we have to drop the burdens of history and cast our fate to this favourable and prevailing wind.

(1,054 words)

5^th June 2010

Gautam Mukherjee

Published in Leader Edit slot in The Pioneer on June 16th 2010 as "We must seize the moment". Repeated online at www.dailypioneer.com and archived there under Columnists.